I remember hearing about Steve Jobs being forced out of Apple, and the McDonalds brothers being forced out of McDonald’s. In both instances, the method of forcing was a buyout, but I don’t understand how this can be considered “forcing” if they consented to sell their shares. I feel that I am misunderstanding what happened, and just want to know how a shareholder can be forced to sell their stake in a company.
In: Economics
You’re mistaken about both Steve Jobs/Apple and about the McDonald’s brothers. Neither was forced to sell their shares. The McDonalds brothers sold their shares to Kroc voluntarily (albiet he put them into a corner by purchasing the land that they’re restaurants were located on, becoming their landlord and threatening to shut them down). Steve Jobs was fired as CEO by the Apple Board. He (in anger) sold all of his shared except 1 – no forced sale.
In general, there is no way for a shareholder to be forced to sell their shares. However, when you become a shareholder in a company, you sign up to a shareholder agreement. Sometimes those agreements can have clauses in them (i.e. drag along or buy-sell clauses) which give majority shareholders the ability to force minority shareholders to sell their shares to them. But without such an ability contained within your shareholder agreement – you can’t be forced to sell.
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